Budget 2024 highlights: Allocation for FAME subsidy for electric vehicles

The government has allocated ₹2,671 crore under the scheme for Faster Adoption and Manufacturing of Hybrid and Electric Vehicles in India for fiscal year 2024-25.

The government scheme, popularly known as FAME India, is aimed at promoting the adoption of electric and hybrid vehicles in the country.

As the FAME-II scheme, which had an outlay of ₹10,000 crore, expires on March 31 this year, the new outlay under FAME III will have a tenure of two years. However, the subsidies per vehicle under the new scheme are likely to be lower compared to FAME II, the sources said.

Launched in 2015 as part of the National Mission on Electric Mobility, the scheme's ultimate goal is to reduce the country's dependence on petrol and diesel vehicles. Under the scheme, the government offers subsidies to EV or hybrid vehicle manufacturers and buyers. The subsidies or incentives offered under the scheme are determined based on the vehicle category and battery specification.

Since its launch, the scheme has received multiple extensions and the current phase is valid till March 2024.

Under FAME Phase I, the government focused on four key points -- demand creation, technology, pilot project, and charging infrastructure.

The first phase of the FAME India Scheme was rolled out on April 1, 2015, for five years with a budget outlay of ₹895 crore.

The second phase of this scheme was launched on April 1, 2019, and will continue till March 31, 2024. Under this phase, the government is focused on the electrification of public and shared transportation. FAME II has a budgetary allocation of ₹ 10,000 crore. Out of the total allocation, 86% of the fund has been deployed to increase demand for EVs in the country.

In Budget 2023, Finance Minister Nirmala Sitharaman nearly doubled the FAME II outlay to ₹5,172 crore. In FY 2020, the government allocated ₹500 crore for FAME II. The allocation received a cut in FY 21 and came down to ₹318 crore. In FY22, the government allocated ₹800 crore and the total allocation increased to nearly ₹2,900 crore in FY23.

The government has increased the total funding for FAME II by another ₹1,500 crore. The Department of Expenditure (DoE), on January 2, approved the proposal to increase the outlay from ₹10,000 crore to ₹11,500 crore.